The Government is establishing a company to act as a bridging investor for regional water infrastructure development, Primary Industries Minister David Carter announced today.

In 2011 the Government signalled plans to invest up to $400 million in regional-scale schemes to encourage third-party capital investment. Cabinet has now directed that $80 million for the initial stages of the company’s operation be set aside in Budget 2013.

“The development of well-designed storage and irrigation infrastructure has the potential to deliver significant economic growth for our primary industries and support new jobs, which will have a flow-on effect for all New Zealanders,” says Mr Carter.

“New Zealand naturally has plenty of water – this is about managing the resource better for the economy and the environment.”

Two examples of how much spare water we have is the large amounts being spilled at the Clyde and Roxburgh Dams:

Mr Carter says that because the opportunity to take a stake in developing regional-scale water infrastructure is new for private investors, it is appropriate for the Government to take a bridging investment role to ensure the right projects can get underway.

“The Crown-owned company will be a minority investor in any development project, and it will also plan to be a relatively short-term investor.

“A number of groups are developing proposals for these larger, regional-level schemes, and the Government expects to consider at least one proposal in the next 12 months.

“Reliable irrigation represents a major step in unlocking economic potential for New Zealand, having our tradable sectors growing strongly and delivering on the Government’s economic growth goals.

“It will also be better for the environment, as these schemes will lead to more efficient water use, and can provide for the replenishment of aquifers and the restoration of stream and river flows,” Mr Carter says.

The company will provide short-term bridging loans to irrigation schemes to enable regional projects to get underway.

The necessity for large amounts up front for schemes which will have multi-decade pay-backs has been a very high hurdle which has held back irrigation development.

The company will provide short-term bridging loans to irrigation schemes to enable regional projects to get underway.

“What the Government is doing here should be applauded by environmentalists as much as it will be by farmers,” says Bruce Wills, President of Federated Farmers, speaking from his farm in the Hawke’s Bay.

“It was over 30 degrees outside and the pasture I was looking at is brown. The last significant rainfall we had here was before Christmas but I am not complaining, this is farming on the East Coast.

“In saying that it highlights the big two opportunities we have with water storage, the economic and the environmental.

“The best way to keep nutrients and soil on our farms and out of water is green living grass. It is really that simple.

“Farms like mine have dams but they can only last so long. In winter, when you see our rivers over capacity, you ask why this cannot be stored for use when we hit a dry spell like now.

“Take the Hawke’s Bay Regional Council’s Ruataniwha Plains Water Storage Project as one example. If it comes off, it will not only be big for the Hawke’s Bay but big for New Zealand.

“The resulting reservoir will cover an area of some 372 hectares; only slightly smaller than Sydney’s central business district but around double the size of Wellington’s.

“Farmers will have to pay a water distribution price so this is not a hand out, but a hand up. The government will exit to bring in further private sector investment. We only need look to the performance of Fonterra’s units on the NZX to see what could be possible.

“It also speaks volumes that the poster project for water storage remains Canterbury’s Opuha Dam. This exercise in perseverance took years highlighting why short-term government involvement is needed to deliver economic infrastructure.

“What we know from Opuha is that since it opened there has been numerous environmental and recreational spin-offs, in addition to benefiting farmers of course.

“The Ruataniwha Plains Water Storage Project in my area will lift the area of land influenced by irrigation from 6,000 hectares to some 42,000 hectares.

“Economic analysis indicates farm output in the Hawke’s Bay will rise by $160 million each year with farm value add increasing by $70 million. That last amount includes additional household income worth $24 million each year.

“An additional 632 full-time equivalent jobs will be created and we are just talking about one project. These are real green jobs because that is the colour of the grass it will grow.

“This will greatly aid the development of not only pastoral agriculture and horticulture, but value-added manufacturing too. In early 2012, Heinz announced closure of their Australian plants in favour of the Hawke’s Bay.

“Politicians from the left and the right agree Canterbury’s Opuha Dam works, so why not speed similar projects along? This is what the Government is doing here and it will be as good for jobs as it will the environment,” Mr Wills concluded.

David Carter has been a strong advocate for irrigation in general and water storage in particular.

We drove down the east side of Lake Dunstan before crossing over it at Cromwell on Wednesday evening.

The lake was formed – more than a little controversially – when the Clyde Dam was built.

It interrupts the flow of the Clutha River but the river is still there, feeding and in turn being fed by Lake Dunstan.

We crossed the Clutha again north of Luggate on our way home yesterday. The water looked just as it always has, even though it’s dammed at Hawea a few kilometres above the bridge.

I have no doubt it looks the same below the Clyde Dam too even though both dams are owned by Contact Energy which, is a publicly listed power company.

In case that’s not clear, that means the state doesn’t own the dams and hasn’t for sometime.

Private ownership of the power companies operating on the Clutha River hasn’t affected the water and whoever may or may not own it. Why would the partial float of other energy companies have any affect on the water they use?

Like this:

On Q&A some weeks ago Guyon Espiner asked a Labour MP if he knew which power company he used.

I can’t find the link but I think it was David Cunliffe. Whoever it was struggled to answer as many people will unless they’re the one who pays the household bills.

Many people would also not be sure who owns the power company which supplies them. That’s not surprising when it’s not who owns it but the price they charge and service they provide which concerns most of us.

However, if you’re a party opposing the Mixed Ownership Model for State Owned Enterprises, you ought to know which companies are publicly owned and which ones aren’t, if only to stop you using a photo of one which isn’t to illustrate your campaign.

Whaleoil has a copy of Labour’s brochure campaigning against National’s policy to sell minority shares in a few state owned companies. It’s illustrated with a photo of the Clyde Dam which isn’t owned by the state, it’s owned by Contact Energy.

That’s a silly dam(n) mistake which doesn’t do anything for the credibility of the party or its policy.